Woosh posts annual loss as costs mount, will need more cash

Woosh posts annual loss as costs mount, will need more
cash from parent

By Paul McBeth

March 4
(BusinessDesk) - Woosh Wireless Holdings, the local internet
service provider, posted a loss in the 2013 financial year
and will need more cash from its unprofitable Californian
parent, Craig Wireless Systems, to meet future cash-flow
requirements.

The Auckland-based company made a net loss
of $2.59 million in the 12 months ended Aug. 31, 2013,
compared to a loss of $2.39 million in the 10 months ended
Aug. 31, 2012, according to financial statements lodged with
the Companies Office. Woosh made an operating loss of $1.45
million on sales of $16.1 million. It held cash and
equivalents of $448,000 as at Aug. 31.

The losses
decreased Woosh’s cash resources and indicated a
“material uncertainty that may cast doubt about the
ability of the group to continue as a going concern,”
according to a note to the accounts. Craig Wireless intends
to provide additional support and won’t require repayment
of almost $7 million in shareholder loans, it said.

“Ongoing operation and cost improvement initiatives are
underway to reduce operating losses,” the accounts said.
“However, it is forecast that further cash injections will
be required in order for future cash-flow requirements to be
met.”

The accounts were tagged by new auditor William
Buck Christmas Gouwland over Woosh’s ability to continue
as a going concern because of the company’s losses and net
liabilities of $2.44 million, though they didn’t qualify
their opinion.

Woosh and Craig Wireless president Gary
Birkland said the parent company has “committed management
resource and continue to financially support Woosh to ensure
that it is able to fulfil its potential in the New Zealand
wireless broadband market.”

Craig Wireless bought 51
percent of Woosh for US$5.5 million in 2011 in a deal to
satisfy $20.6 million of debt owed to then-investor Kuwait
Finance House. The following year it lifted its stake to 75
percent with an equity injection of US$1 million.

TSX-listed Craig Wireless has its own issues to continue
as a going concern, with accounts for the three months ended
Nov. 30 showing the telecommunications company obtained a
US$2 million loan from chief executive Boyd Craig and was
holding “active negotiations with other potential sources
of third party financing as required in the cash flow
model.”

At the time, Craig Wireless said the financing
hadn’t been completed, and “would materially impact the
company if the funding is not available.”

Woosh’s
parent company made a loss of C$10.7 million on sales of
C$13.5 million in the year ended Aug. 31, and reported a
loss of C$1.9 million on sales of C$3.2 million in the three
months ended Nov. 30. It held cash resources of C$898,000 as
at Nov. 30.

The New Zealand assets were valued at C$8.57
million as at Nov. 30, making up the bulk of Craig
Wireless’s almost C$12 million in non-current assets.

Last year, Craig Wireless subsidiary Craig Wireless New
Zealand Spectrum Operations bought management rights for an
additional 35 megahertz in the 2.3 gigahertz range in New
Zealand from state-owned Kordia for $2.2 million.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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